QUESTIONS If a firm insures itself against foreign exchange risk, it is engaging in countertrade. arbitrage. currency speculation. forecasting. hedging. QUESTION 10 Which of the following is an implication of the global monetary system for currency management? Both short- and long-term exchange rate movements are easy to predict. Speculative buying and selling of currencies create predictable movements in exchange rates. The foreign exchange market is efficient. Exchange rate movements can be predicted by the purchasing power parity theory The foreign exchange market is driven by a combination of government intervention and speculative activity